More signs Apple will launch an AR device

More evidence that Apple may be working on a Google Glass-like augmented reality (AR) device has surfaced, according to tech evangelist Robert Scoble.

Scoble noted that employees from German lens and optics manufacturer Carl Zeiss AG seemingly confirmed at CES 2017 that the company had partnered with Apple.

The is just the latest indication that Apple is doubling down on AR technology. It was reported last November that Apple had been exploring building a digital glasses product, similar to Google Glass, and was already in talks with potential suppliers, according to Bloomberg. If Apple were to move forward with the product, it wouldn't release it until 2018 or later, the report said. While the company has yet to confirm this rumor, its validity is likely for several reasons:

The tech giant has been trying to diversify its revenue sources for several years, since the iPhone makes up such a large bulk of its revenue. That has led to ventures in wearables like the Apple Watch, services like Apple Music, and entry into the automobile industry with Apple CarPlay. However, the urgency has intensified as global smartphone shipments continue to decelerate. In 2016, Apple reported its first year-over-year decline in annual revenue.

Apple needs to put a horse in the AR race, or it risks falling behind the competition. Google, Microsoft, Facebook, and Snap have all launched technology that's either AR and VR ready or, in Snap's case, well positioned to integrate the technology. And while Apple CEO Tim Cook noted his bullish stance on the technology, the company hasn't announced any new products. The AR/VR market is projected to reach $80 billion by 2025, according to Goldman Sachs estimates.

Nevertheless, Apple will need to be careful with whom it markets these AR devices to, or it could find itself with another Apple Watch. When it first launched, the Apple Watch was marketed toward everyone with an iPhone. However, after 12 months, global device shipments flatlined. A big reason for this was that there were too many shared features and apps between the iPhone and Apple Watch.

Considering that Apple is already adding AR tech into the iPhone 7 and future iterations, it would make sense for Apple to target a new AR device to a specific segment of consumers or industries, such as healthcare or manufacturing, rather than implementing a consumer-wide launch. Taking this approach could help distinguish the new product and mitigate the cliff dive in shipments seen with the Apple Watch.

The virtual reality (VR) market made significant strides throughout 2016. New VR headsets like the Oculus Rift and the HTC Vive debuted amid great consumer anticipation, while VR content launches kept pace, with Batman: Arkham VR and Chair In A Room garnering encouraging download totals.

At the same time, industry groups and conferences brought developers, investors, and content producers together, helping to further ramp up buzz in this nascent space.

BI Intelligence, Business Insider's premium research service, forecasts shipments of VR headsets to spike by 1047% year-over-year (YoY) to 8.2 million in 2016. This growth will help propel the virtual reality space to exceed $1 billion in revenue for the first time, according to research by Deloitte. Powering that growth is an estimated 271% increase in investment in AR (augmented reality) and VR companies from 2015, according to estimates from CB Insights.

But while 2016 has indeed been an important year for the VR market, it hasn't necessarily been a big one — at least not compared to its future growth potential.

VR headset shipments will continue to grow in the years ahead, driven by the introduction of new content that will appeal to a broad swath of users.

Jessica Smith, research analyst for BI Intelligence, has compiled a detailed report on virtual reality that explores the highly fragmented and volatile VR market that emerged in 2016, lays out the future growth potential in numerous key VR hardware categories as driven by major VR platforms, and examines consumer sentiment and developer excitement for VR, presenting which headset categories and platforms are most poised for success in the near- to mid-term.

Here are some key takeaways from the report:

This has been an important foundational year for the VR market.New hardware and content have brought more options to market to appeal to a wider set of consumers.

But the growth seen this year is merely a foreshadowing of the future. The highly fragmented VR market today will eventually narrow as the market grows and matures.

After considerable progress in 2016, the VR market is ripe for transformation in 2017. Developers, consumers, investors, and hardware makers have a host of options from which to choose, each with their own strengths and shortcomings.

The environment is poised for the first killer VR app to hit the market sometime in 2017, which will be a major catalyst for consumer adoption of VR hardware.

Not all headset categories and platforms will emerge as winners in the near future. More immersive headsets that offer the best VR experiences are too expensive for most consumers. Alternately, affordable headsets that rely on smartphones as processors offer sub-par experiences that can induce sickness.

In full, the report:

Identifies the major players in today's VR hardware and platform markets.

Estimates future growth of each of the major VR categories.

Explores barriers to mass market consumer adoption for each of the VR hardware categories.

Considers how developer sentiment is driving the growth of various platforms.

Assesses how the market will shake out over the next five years in terms of size and the success of various VR hardware categories.

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